Alberta Department of Energy

Bitumen Royalty in Kind Program

REQUEST FOR PROPOSALS

PROCESSING OF CROWN ROYALTY BITUMEN

October 19, 2009

Closing Date: January 27, 2010

www.energy.alberta.ca/BRIK.asp

contact: BRIK@gov.ab.ca

This RFP was issued by the Department of Energy in preliminary form on

July 21, 2009. The Department invited comments and suggestions by August
31, 2009, and now re-issues this RFP in an amended, final form.

ADDENDUM #1 – ISSUED OCTOBER 27, 2009

The above Request for Proposals (the “RFP”) is modified in accordance with the following:
1. In Section 4.1 of the body of the RFP, the date December 2, 2009 is corrected to
January 27, 2010.
 TABLE OF CONTENTS

1. INTRODUCTION

1.1 Overview of the BRIK Procurement 1

1.2 Terminology 1

2. PROCUREMENT OF BITUMEN PROCESSING

2.1 Contractual Parameters 2

2.2 Risk Allocations 4
2.3 Addenda 4
2.4 Anticipated Timelines 5

3. PROCUREMENT PROCESS

3.1 Communications with Department 5

3.2 No Lobbying or Gratuities 6
3.3 No Collusion 6
3.4 Information Meetings 6
3.5 Comments on RFP 6
3.6 Requests for Clarification 6
3.7 Contact Individual 7
3.8 Confidentiality and FOIP 7
3.9 APC Site 7
3.10 Fairness Monitor 7
3.11 Addenda 8

4. PROPOSAL SUBMISSION

4.1 Time and Place 8

4.2 Form, Format and Maximum Length 8
4.3 Non-Conforming Proposals 8
4.4 Proposals in the Alternative 9
4.5 Enhancements 9
4.6 Changes in Proponent Structure 9
4.7 Withdrawal of Proposal 9

5. PROPOSAL CONTENT

5.1 Cover Page 9

5.2 Overview / Abstract 10
5.3 Sections of Proposal 10
5.4 Personal Information and FOIP 10

6. EVALUATION CRITERIA

6.1 Overview of Evaluation 11

6.2 Detailed Evaluation Criteria 11

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7. EVALUATION AND SELECTION PROCESS

7.1 Evaluation Team 11

7.2 Department may Engage Consultants 12
7.3 Questions by Department 12
7.4 Presentations 12
7.5 Decision by Minister of Energy 12
7.6 Minister may Select One, Two or Three Proposals 12
7.7 Announcement upon Selection 13

8. CONTRACT FINALIZATION

8.1 Negotiation / BAFO Process 13

8.2 Crown Agent as Contracting Party 13
8.3 Performance Deposit 14

9. OTHER TERMS AND CONDITIONS OF THIS RFP

9.1 REOI Superseded 14

9.2 Cancellation of Procurement 14
9.3 Non-recourse / Limitation of Claims 14

GLOSSARY OF TERMS 15

APPENDIX – EVALUATION CRITERIA AND METRICS

Part 1 – Government Goals and Objectives 1
Part 2 – Economic Assumptions 2
Part 3 – Evaluation Criteria 2
Part 4 – Evaluation Process 3
Part 5 – Section-by-Section Content and Evaluation 4
1. Business Plan
2. Technology and Project Configuration
3. Proponent’s Capability
4. Project Financing
5. Commercial Arrangement; Risks and Returns
6. Project Execution
7. Bitumen Feedstock
8. Project Economic Viability
9. Product Diversification
10. Environmental Performance
11. Government Strategic Objectives

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1. INTRODUCTION

1.1 Overview of the BRIK Procurement

The Department of Energy (the “Department”) has announced an intention to commence taking
bitumen royalty in kind (“BRIK”) in 2012. The Department intends by this Request for
Proposals (the “RFP”) to procure a long-term (15 to 30 years (the “Term”)) contract with a
respondent to this RFP (a “Proponent”) for the processing of certain royalty volumes of bitumen,
or alternatively, for the purchase of such royalty volumes of bitumen.

The contract (the “Processing Agreement” or the “Purchase Agreement”, as the case may be)
with the successful Proponent may be entered into either directly by Her Majesty the Queen in
right of Alberta (“HMQ”) or through an agent fully backstopped by HMQ (collectively referred
to throughout this RFP as the “Crown”).

The Crown will undertake to supply, throughout the Term, “Specified Volumes” of 50,000 to
75,000 barrels per calendar day (“BPD”), as elected by the successful Proponent, of bitumen
(measured for purposes of this RFP in terms of “neat” bitumen, i.e., raw bitumen or bitumen
blend net of diluent) within contractually specified quality parameters. Although the Department
anticipates that higher volumes of Crown royalty bitumen will become available over time, this
particular RFP does not deal with, and Proposals in response to this RFP are not to address,
volumes of Crown royalty bitumen beyond the Specified Volumes. The Term will commence on
a date between January 1, 2013 and December 31, 2018, as elected in the Proposal of the
successful Proponent.

Proponents may offer to process the Crown’s royalty volumes of bitumen, in which case
Proponents may at their election additionally offer product selection and/or marketing services.
Alternatively, Proponents may offer to purchase the Crown’s royalty volumes for processing
within Alberta. Proponents may structure their proposal in the alternative, that is, offering at the
Crown’s election to either process or purchase the Crown’s royalty volumes.

The above invitation extended to Proponents is referred to in this RFP as the “Procurement”.

1.2 Terminology

Acronyms and other expressions defined for convenience in this RFP are defined as they first
appear; all such defined terms are also listed in the Glossary of Terms at the end of the body of
this RFP.

Where an expression is defined in the singular, the plural shall be read as having a corresponding
meaning, and vice versa.

References in this RFP to “Section” numbers correspond to the numbered provisions of the body
of this RFP.

References to “this RFP” include the attached “Evaluation Criteria and Metrics”.

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2. PROCUREMENT OF BITUMEN PROCESSING

2.1 Contractual Parameters

Proposals submitted in response to this RFP (“Proposals”) must, except in relation to

Enhancements expressly provided for in Section 4.5, be structured within and in compliance with
the following contractual parameters:

• The Proposal must commit to process or purchase the Specified Volumes (being an
amount specified in the Proposal that is not less than 50,000 BPD and not more than
75,000 BPD) of Crown royalty bitumen.
• The Proposal must elect a committed term (the “Term”) for processing or purchasing the
Specified Volumes of not less than 15 years and not more than 30 years.
• The Proposal must elect a date (the “Commencement Date”) for the Term that is not
earlier than January 1, 2013 and not later than December 31, 2018.
• The Proposal must:
o specify either process or purchase throughout the Term (but may propose in the
alternative as contemplated by Section 4.4); and
o subject to the next following point regarding construction in phases, specify one
number as the Specified Volumes throughout the Term.
• The Proposal may contemplate construction of the Proponent’s proposed facility (the
“Processing Facility”) in two or more phases, in which case the following shall apply:
o all phases must be complete and operational no later than December 31, 2018;
o the Proposal may provide for proportionate ramping up of the Specified Volumes
from one phase to the next;
o for each phase, at least 25% of the Processing Facility’s feedstock must be
supplied other than by the Crown royalty volumes; and
o the Proponent must provide assurance (whether by security or otherwise)
sufficient to satisfy the Crown, acting reasonably, that construction of the
Processing Facility will proceed beyond the initial phase to a design capacity of
at least 100,000 BPD by December 31, 2018.
• If the Proposal offers to purchase the Specified Volumes throughout the Term, then the
Proposal must include the Proponent’s irrevocable commitment to upgrade within
Alberta all of the Specified Volumes to at least a high quality light sweet synthetic crude
oil, 30 degrees API or lighter.
• The Proposal must offer:
o if the Proposal is to process the Specified Volumes, a formula for deriving the
processing fee throughout the Term; or
o if the Proposal is to purchase the Specified Volumes, a formula, based on market
price, for deriving the purchase price throughout the Term.
• The formula for deriving the processing fee must not pass through to the Crown the
capital costs of constructing the Processing Facility except in accordance with the
following:
o the Proposal must set out the Proponent’s current best estimate (“CBE”) of the
capital cost of constructing the Processing Facility, which estimate must exclude

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 the capital cost of any design elements not expected to have any application or
utility in respect of the Specified Volumes;
o the CBE must be supported by an explanation of the basis for and the level of
confidence in the estimate, as well as a detailed itemized breakdown of the costs
included in the estimate and an explanation of any allowance for contingency;
o the maximum actual capital cost that may be included in the formula must not
exceed 130% of the lowest of:
 the CBE; and
 at the time of full project sanction, the Proponent’s best estimate (or if a
range, the median of that range) of the capital costs of constructing the
Processing Facility (similarly excluding design elements not expected to
have any application or utility in respect of the Specified Volumes), as
relied upon by the Proponent for its internal purposes;
o any increase beyond 100% of the CBE must be allocated proportionately based on
the share of the designed capacity of the Processing Facility represented by the
Specified Volumes; and
o ongoing expansion capital and sustaining capital costs are not to be included or
reflected in the capital cost component of the formula for deriving the processing
fee.
• The formula for deriving the processing fee must not pass through to the Crown the
operating costs of the Processing Facility except in accordance with the following:
o the Proposal must set out the Proponent’s committed benchmark operating costs
(“Benchmark Costs”), as of the first year of the Term, expressed in 2009 dollars;
o the Benchmark Costs may include an allowance for anticipated sustaining capital
expenses, if accompanied by an explanation, in reasonable detail, of the
methodology used to calculate the allowance;
o the Benchmark Costs must not include:
 the cost of obtaining bitumen (or bitumen blend) other than the Specified
Volumes;
 any non-cash items such as depreciation and amortization, gain or loss on
foreign exchange, or financing costs; or
 capital costs of any expansion of the Processing Facility beyond its
capacity at the commencement of the Term;
o the formula may specify an appropriate inflation index for adjusting the
Benchmark Costs:
 from 2009 until the commencement of the Term; and
 throughout the Term;
o for electricity, natural gas or other energy externally purchased at arm’s length,
the formula may allow, in lieu of an inflation index adjustment, an adjustment to
actual market price, provided the Proponent is prepared to provide reasonable
assurance to the Crown on an ongoing basis that such purchases are the optimally
economical means of meeting the energy needs of the Processing Facility;
o the adjustment in the Benchmark Costs must be allocated proportionately based
on the share of the designed capacity of the Processing Facility represented by the
Specified Volumes; and
o the formula must use the lower of:

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  the adjusted Benchmark Costs; and
 actual operating costs;
as assessed on a cumulative basis.
• The Proposal must not be conditional upon direct assistance of any kind by the Crown in
the obtaining of financing for construction of the Processing Facility, whether by loans,
loan guarantees, any other form of credit assurance, or equity investment.
• The Proposal must not be contingent upon or depend on special tax or royalty treatment
different from the tax or royalty treatment of comparable facilities or operations.
• The Proponent must undertake that its Processing Facility will be constructed in Alberta,
and will be fully operational upon commencement of the Term, with a capacity of
processing not less than 100,000 BPD of bitumen to at least low-sulphur synthetic crude
oil, 30 degrees API or lighter. The Processing Facility may be greenfield or brownfield,
but must establish incremental upgrading capacity in Alberta through construction of a
new facility or expansion of an existing facility and not through de-bottlenecking.
• The Proposal must not be contingent upon or depend on, or propose to commit to,
process or purchase Crown royalty volumes of bitumen beyond the Specified Volumes.
• The Proponent may propose that its undertakings in respect of its Processing Facility be
limited in relation to specific and narrowly defined events of “force majeure”, provided
such events do not include events based on or related to economic circumstances or
difficulties in relation to technology, financing, the costs or availability of labour or
materials, or regulatory approvals or compliance (except where such difficulties in
relation to regulatory approvals or compliance arise from governmental prohibitions or
restrictions that are tantamount to prohibitions).
• The Proponent may propose that it be entitled, in the event of unfavourable economic
circumstances or difficulties encountered in relation to technology or financing, to
terminate the Processing Agreement prior to full project sanction for its Processing
Facility, but in that event the Province shall be entitled to retain (as liquidated damages)
the performance deposit required under Section 8.3.

2.2 Risk Allocations

Proposals must present a proposed allocation of key risks. The Proponent’s allocation of key
risks must, except in relation to Enhancements expressly provided for in Section 4.5, observe and
comply with the contractual parameters set out in Section 2.1 as well as the following:
• The Crown will undertake to deliver the Specified Volumes during the Term, but such
undertaking must be limited by at least the following:
o true “act of god” circumstances;
o actions by the federal government of Canada that prohibit, or are tantamount to a
prohibition of, the resourcing, delivery or upgrading of bitumen or the sale of
products produced through the upgrading of bitumen.
• The Crown will not accept any element of feedstock supply risk other than in respect of
the Specified Volumes.
• The Processing Facility must be sufficiently flexible to accommodate variations in
bitumen quality. The Crown intends to undertake only the following assurances with
respect to the quality of the Specified Volumes and the range of different bitumens that
may be included within the Specified Volumes:

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 o the Specified Volumes can include supplies of any bitumen that is (i) marketed, or
could be marketed, in material quantities to third parties, and (ii) blended to meet
Enbridge’s specifications for transportation by pipeline;
o the Crown will consider a more tailored stream of Specified Volumes only if the
Crown can achieve a reasonable assurance that it will be able to consistently
deliver such tailored stream without thereby being economically disadvantaged.
• Except as expressly set out in Section 2.1, the Crown will not accept any risk that the
capital costs or operating costs of the Processing Facility will exceed thresholds specified
in the Processing Agreement or Purchasing Agreement.

2.3 Addenda

The contractual parameters set out in Section 2.1 and the risk allocation parameters contemplated
by Section 2.2 may be further defined or altered by amendments to this RFP (“Addenda”) issued
by the Department pursuant to Section 3.11. Addenda may include framework documentation,
either in the form of a draft letter of intent or draft term sheet, antecedent to the development of
definitive contractual documentation.

2.4 Anticipated Timelines

The Department anticipates proceeding with this Procurement in accordance with the following
timelines:

Final Date for Submission of Proposals January 27, 2010

Announcement of Selected Proposal(s) on or about May 31, 2010

Signing of Purchase / Processing Agreement 2010

BRIK comes into effect 2012

Supply of Bitumen begins under Agreement 2013 - 2018

The Department may at any time, by Addenda, amend the above timeframes.

3. PROCUREMENT PROCESS

3.1 Communications with Department

All communications by Proponents to the Department or any elected official or other

representative or official of the Crown with respect to this RFP (other than in the course of an
information meeting contemplated by Section 3.1 or presentations under Section 7.4, and other
than submission of Proposals under Section 4.1) must be by e-mail (including any attachments)
sent to and received at the follow e-mail address:

BRIK@gov.ab.ca

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Failure to observe the above requirement may, in the discretion of the Department, result in
disqualification of the Proponent from participating in this RFP.

3.2 No Lobbying or Gratuities

No Proponent or anyone on its behalf shall lobby (other than communications expressly
contemplated by this RFP), or provide any gift or gratuity to, any elected official or other
representative or official or employee or contractor of the Crown with respect to this RFP or the
Procurement.

Failure to observe the above requirement may, in the discretion of the Department, result in
disqualification of the Proponent from participating in this RFP.

3.3 No Collusion

A Proponent must prepare its Proposal independently of any other Proposal, and must not
conspire or collude with any other Proponent in relation to any aspect of its Proposal.

Failure to observe the above requirement may, in the discretion of the Department, result in
disqualification of the Proponents from participating in this RFP.

3.4 Information Meeting

The Department may, if it considers it would be useful to do so, host an information meeting at a
time following issue of this RFP.

3.5 Comments on RFP

The Department invited written comments by August 31, 2009 on the “Initial RFP”, and
considered such written comments in the “Final RFP” issued on October 19, 2009. The
Department does not intend to invite or consider additional comments regarding the form or
content of this RFP.

3.6 Requests for Clarification

A Proponent may at any time on or before December 23, 2009, by written communication in
accordance with Section 3.1, request clarification of any aspect of this RFP. The Department
may in its discretion:
• if the request for clarification was submitted in confidence,
o provide the requested clarification directly and solely to the Proponent, if in the
assessment of the Department the clarification can be so provided without
introducing any fairness issue relative to other Proponents, or
o refuse to provide the requested clarification, if in the assessment of the
Department the clarification cannot be provided directly and solely to the
Proponent without introducing an issue of fairness relative to other Proponents (in

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 which case the Department may invite the Proponent to resubmit the question on
a non-confidential basis;
• if the request for clarification was submitted other than in confidence,
o provide the requested clarification directly and solely to the Proponent, if in the
assessment of the Department the clarification is likely to be pertinent only to the
Proponent, or
o provide the requested clarification by posting to the web site referred to in Section
3.9 or by issuing an Addendum that provides the clarification.

3.7 Contact Individual

Any requests for clarification submitted under Section 3.6 shall specify the name of the
corporation or other legal entity on whose behalf the comments or request are submitted, and
shall set out the name, office held and contact information (including mailing address, fax
number, e-mail address and telephone number) of a designated contact individual.

3.8 Confidentiality and FOIP

All requests for clarification submitted under Section 3.6, and all Proposals (including any
materials submitted pursuant to Section 4.3 or Section 7.3) submitted in response to this RFP
will be considered to have been submitted in confidence and shall be maintained in confidence
and kept reasonably secure by the Department. Notwithstanding the confidentiality of the
information, the provisions of the Freedom of Information and Protection of Privacy Act
(Alberta) applicable in the event of any request for access will have application, provided that the
Department will also observe the provisions of that Act governing confidentiality of third party
commercial or financial information, including the requirement that notice and an opportunity to
object to disclosure be afforded to the party that supplied the confidential information.

3.9 APC Site

This RFP has been posted with the Alberta Purchasing Connection (“APC”), and upon posting
was assigned a specific web page by APC. Prospective Proponents wishing to be apprised of
communications from the Department on an ongoing basis (including any Addenda issued
pursuant to Section 3.11) with respect to this RFP should register at the APC Site, via the link to
the APC Site provided at www.energy.alberta.ca/BRIK.asp.

3.10 Fairness Monitor

The Department has engaged a Fairness Monitor to carry out duties generally in accordance with
the following mandate:
• Did the Department follow the process specified in this RFP and any Addenda?
• Were Addenda issued only for reasons consistent with the stated objectives of this RFP
and in accordance with the process specified in this RFP?
• Did the Department carry out the evaluation and selection process contemplated by
Sections 7.1 through 7.6 honestly and in good faith, in accordance with the criteria in this

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 RFP and any Addenda, in an unbiased manner, and without conflict of interest on the part
of any individual participating in the evaluation process?

Proponents who have submitted Proposals or, prior to the deadline for submission of Proposals,
have registered at the APC Site, will be at liberty to contact the Fairness Monitor directly with
respect to any matter within the above terms of reference. Contact information for the Fairness
Monitor has been posted on the APC Site.

3.11 Addenda

The Department may at any time prior to the deadline for the submission of Proposals issue
Addenda to this RFP by posting to the APC Site.

4. PROPOSAL SUBMISSION

4.1 Time and Place

Proposals must be physically received (no electronic delivery) by the Department by 14:00:59
Alberta time (MST) on January 27, 2010 at the following address (and not at the main offices of
the Department at North Petroleum Plaza):

Alberta Department of Energy

11th Floor, 9942 - 108 Street
Edmonton, AB
T5K 2J5
Attention: BRIK RFP Administrator

4.2 Form, Format and Maximum Length

Proposals must be:

• delivered in electronic (compact disc or USB flash drive; not by e-mail) form together
with one paper copy;
• formatted on 8 ½” x 11” paper; and
• not more than 200 pages, inclusive of any appendices and schedules, and including any
“Enhancements” contemplated by Section 4.5.

4.3 Non-Conforming Proposals

If a Proposal is not strictly in accordance with any provision of this RFP (“Non-Conformance”),
the Department may:
• if in the Department’s assessment the Non-Conformance is immaterial to or is not
detrimental to the objectives of the Department as set out in this RFP, waive the Non-
Conformance;
• if in the Department’s assessment the Non-Conformance is an omission, by notice to the
Proponent allow up to five business days to supply the omitted material;

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 • if in the Department’s assessment the Non-Conformance is material to and detrimental to
the objectives of the Department as set out in this RFP and is not an omission than can be
rectified by the supply of omitted material, reject the Proposal.

4.4 Proposals in the Alternative

A Proposal may be submitted in the alternative only (a) as expressly contemplated by Section 4.5
for, and (b) in relation to the following aspects, expressly contemplated by Section 1.1, of the
Proposal:
• whether the Proposal is to process, or purchase, the Crown’s royalty volumes of bitumen;
• whether the Proposal offers product selection services in addition to processing of
bitumen; and
• whether the Proposal offers marketing services in addition to processing of bitumen.

4.5 Enhancements

A Proposal may, in addition to presenting a core Proposal that is compliant with this RFP in
all material respects, provide the Crown with the option to elect specific additional provisions
(“Enhancements”) that but for this Section would be non-compliant with the contractual
parameters established by Section 2.1 or the risk allocation parameters established by Section
2.2. In that event the Crown may at its option elect to accept the Proposal either with or without
the proposed Enhancements, notwithstanding that the Enhancements would but for this Section
render the Proposal non-compliant with this RFP.

4.6 Changes in Proponent Structure

If following the submission of a Proposal and at any time prior to the entering into of a
Processing Agreement or a Purchase Agreement, there is any change in any of the following:
• membership in a consortium comprising the Proponent;
• ownership of a controlling interest in the Proponent or any member of a consortium
comprising the Proponent;
then the Department may, if in the Department’s assessment the change is materially detrimental
to the Province’s objectives, in the sole discretion of the Department either accept the change or
else reject the Proposal.

4.7 Withdrawal of Proposal

A Proponent who has submitted a Proposal may at any time thereafter and prior to execution of a
Processing Agreement or Purchase Agreement withdraw its Proposal by written notice to the
Department.

5. PROPOSAL CONTENT

5.1 Cover Page

Proposals must contain at the beginning of their Proposals a cover page setting out the following:

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 • The name of the corporation or other legal entity that is the Proponent or is the
Proponent’s “Corporate Lead” in respect of the Proposal;
• If the Proponent is a consortium, the names of all corporations or other legal entities that
are part of the consortium, and the name of the consortium, if any;
• The name, if any, that the Proponent ascribes to its proposed project;
• The name, office held by, and contact information (including at least mailing address, fax
number and e-mail address) of the individual who is designated as the Proponent’s “Key
Contact”;
• The name and legal status of the corporate entity that the Proponent proposes to enter into
the Processing Agreement as Contractor; and if that corporate entity is not yet in
existence, its intended legal nature, including whether it is intended to be a “special
purpose vehicle” without assets or operations unrelated to the Processing Agreement.

5.2 Overview / Abstract

Following the cover page contemplated by Section 5.1, Proposals must include an overview or
abstract summarizing in not more than five pages the Proposal and the project contemplated by
it, including an indication of each of the following:
• An overview of the proposed Processing Facility;
• Whether the Proposal is (a) for processing of the Crown’s royalty volumes of bitumen
throughout the Term or (b) for purchase of the Crown’s royalty volumes of bitumen
throughout the Term, or (c) includes alternative proposals for processing or purchase of
the Crown’s bitumen, to be elected by the Crown;
• The Specified Volumes (minimum 50,000 BPD, maximum 75,000 BPD) that will be
applicable throughout the Term;
• The source of the feedstock supply other than the Crown royalty volumes;
• Whether the Proposal offers (a) product selection services and/or (b) marketing services
in relation to Crown royalty volumes proposed to be processed by the Contractor; and
• Any Enhancements offered in accordance with Section 4.5.

5.3 Sections of Proposal

The body of the Proposal must be divided into the sequential sections indicated in Part 4 of the
“Evaluation Criteria and Metrics” Appendix attached to and forming part of this RFP. In each
such section, set out clearly any “Enhancements” offered in accordance with Section 4.5, in each
case with express reference to Section 4.5 and expressly identifying the “Enhancement”.

5.4 Personal Information and FOIP

To the extent that a Proposal includes “personal information” as defined in the Freedom of
Information and Protection of Privacy Act (Alberta), whether pursuant to section 3
(“Proponent’s Capability”) or section 6 (“Project Execution”) of Part 5 of the Appendix to this
RFP or otherwise, the Proponent must:
• ensure that the individuals from whom that personal information is being collected are
advised that their personal information is being collected for the purpose of evaluating
the Proponent’s Proposal in response to this RFP issued under the Department’s Bitumen

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 Royalty in Kind Program, and are advised that the name and contact information of the
Department’s representative for answering any questions they may have regarding
collection and use of their personal information is as follows:
Marlene Bruyere,
Director, FOIP and Records Management, Department of Energy
780-644-3778; marlene.bruyere@gov.ab.ca; and
• obtain from each such individual their written authorization to include such personal
information in the Proposal, and produce such authorizations upon request by the
Department.

6. EVALUATION CRITERIA

6.1 Overview of Evaluation

Due to the nature of this Procurement, evaluation of Proposals will necessarily involve
considerable complexity and elements of subjective analysis. The Department will seek to
identify Proposals that, in the Department’s assessment, are likely to meet the following
overarching objectives:
• a signed Processing Agreement or Purchase Agreement;
• an upgrader or refinery or petrochemical complex that receives all required internal and
external approvals, proceeds and is constructed and operational within the timelines
contemplated by this RFP; and
• a project that is technologically feasible and economically viable throughout the term of
the Processing Agreement.

Among Proposals that meet the above overarching objectives, the Department will seek to
identify the Proposal that offers the best overall value to the Province, having regard to:
• the fee, or formula for determining the fee, to be paid by the Crown for processing of
bitumen (or alternatively, the price, or formula for determining the price, to be paid by
the Contractor to the Crown in return for the Crown’s bitumen);
• allocation of risks and returns as between the Contractor and the Crown; and
• value added and other strategic objectives of the Crown, including without limitation
environmental performance.

6.2 Detailed Evaluation Criteria

In furtherance of the objectives set out in Section 6.1, the Department intends to carry out its
evaluation process based on the “Evaluation Criteria and Metrics” Appendix attached to and
forming part of this RFP.

7. EVALUATION AND SELECTION PROCESS

7.1 Evaluation Team

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The Department will formally establish an Evaluation Team comprising representatives from the
Department and other departments of the Government of Alberta. The Fairness Monitor will be
requested to attend all meetings of the full Evaluation Team.

The Department may establish a committee of Deputy Ministers or other senior officials of the
Government of Alberta to receive and consider recommendations of the Evaluation Team and
otherwise participate in the evaluation and selection process.

7.2 Department may Engage Consultants

The Department anticipates engaging consultants external to the Government of Alberta for the
purpose of providing such expert analysis and other services as the Evaluation Team may
require. The Department will not engage consultants who have acted for any Proponent in
connection with the formulation or preparation of that Proponent’s Proposal. The Department
may engage consultants who have or are providing services to a Proponent unrelated to this RFP,
provided “ethical walls” are assured to the satisfaction of the Department. In the event of a “best
and final offer” process contemplated by Section 8.1, the Department may engage consultants
who have acted for a Proponent other than the Proponents involved in that process.

7.3 Questions by Department

Following the deadline for submission of Proposals, and at any time prior to the final decision
contemplated by Section 7.5, the Department may submit written questions to some or any
Proponents with a view to better understanding of their Proposals. In their written responses to
such questions, Proponents must limit their responses to clarifying their Proposals, and must not
in their responses seek to augment or supplement their Proposals except to the extent reasonably
necessary to fully address the specific questions asked by the Department.

7.4 Presentations

Following the deadline for submission of Proposals, the Department may, but is not bound to,
invite either (a) all Proponents, or (b) Proponents whose Proposals have been short-listed, to
make in-person presentations at a specified time and date and location within the City of
Edmonton.

7.5 Decision by Minister of Energy

The final decision in the evaluation and selection process, will be made by the Minister of
Energy, who may rely as he sees fit on any or all of the following:
• analysis and recommendations by the Evaluation Team;
• advice and recommendations by a Deputy Ministers committee; and
• advice or direction from Cabinet or any committee of Cabinet.

7.6 Minister may Select One, Two or Three Proposals

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Following the evaluation and selection process, the Minister of Energy may do any of the
following:
• Select one Proponent and proceed to negotiate the definitive terms of a Processing
Agreement with that Proponent;
• Select two Proponents or three Proponents and proceed with parallel negotiations of the
definitive terms of a Processing Agreement or Purchase Agreement with any of those
Proponents; or
• Reject all Proposals if in the Minister’s assessment no Proposal meets the Department’s
objectives for this RFP.

7.7 Announcement upon Selection

Following selection of one, two or three Proponents by the Minister under Section 7.6:
• the Minister will publicly announce the Proponents that have been selected with a view
to negotiating definitive terms of a Processing Agreement or Purchase Agreement; and
• the Proponents so selected shall not at that time and at any time prior to execution of a
Processing Agreement or Purchase Agreement make any public announcement with
respect to such selection except in alignment with and consistent in all material respects
with the public announcement, that is made by the Minister in relation to such selection,
unless required to do so by applicable securities laws or the rules of any applicable stock
exchange.

8. CONTRACT FINALIZATION

8.1 Negotiation / BAFO Process

If pursuant to Section 7.6 the Minister selects two or three Proponents for parallel negotiations,
then the Department will at that time establish a process and timeline for the parallel
negotiations, potentially including a “best and final offer” (“BAFO”) process based on definitive
terms for a Processing Agreement or Purchase Agreement. In that event, the Department may,
having regard to differences between the Proposals selected for the BAFO process, require that
the best and final offers from the respective selected Proponents be premised on a definitive
Processing Agreement or Purchase Agreement that differs in certain respects for each of the
Proponents selected to participate in the BAFO process.

8.2 Crown Agent as Contracting Party

At the Department’s election, the Processing Agreement or Purchase Agreement entered into
with the Contractor may be entered into by:
• HMQ;
• Alberta Petroleum Marketing Commission (“APMC”), who is an agent of the Crown for
all purposes, such that the obligations of APMC under the Processing Agreement or
Purchase Agreement would be fully binding on HMQ; or
• Any other corporation similarly having “agent of the Crown” status, such that the
obligations of that corporation under the Processing Agreement or Purchase Agreement
would similarly be fully binding on HMQ.

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8.3 Performance Deposit

Upon entering into the Processing Agreement or Purchase Agreement, and as a condition
precedent to that contract coming into effect, the Contractor shall be required to deposit with the
Crown security for the due performance by the Contractor of its undertaking under the
Processing Agreement or Purchase Agreement to construct the Processing Facility. The security
shall initially be in the amount of CAD $50 million, and must be in the form of either of the
following:
• cash; or
• an on-sight letter of credit drawn on a Canadian financial institution acceptable to the
Crown.
The security may be reduced to CAD $30 million upon (i) the Contractor establishing to the
satisfaction of the Department, acting reasonably, that the Processing Facility (including all
phases, if the Proposal intends construction in phases) has received full project sanction,
including fully committed financing sufficient to construct the Processing Facility (including all
phases, if the Proposal intends construction in phases), or (ii) the Contractor achieving
commercial operation of a phase or phases of the Processing Facility that establish a capacity of
at least 50,000 BPD. Upon the Processing Facility as contemplated by the Processing
Agreement or Purchase Agreement being fully constructed and operational (including all
phases), such that the Contractor has commenced processing or purchasing, as the case may be,
all of the Specified Volumes, the security will be releasable to the Contractor. In the event of
any termination by the Crown for cause of the Processing Agreement or the Purchase
Agreement, the security then held by the Crown shall be applied as liquidated damages.

9. OTHER TERMS AND CONDITIONS OF THIS RFP

9.1 REOI Superseded

This RFP supersedes and replaces the previously issued Request for Expression of Interest, the
“Initial RFP” issued on July 21, 2009, and all other previous processes and communications by
the Department in relation to the subject-matter of this RFP. There are no representations,
undertakings or assurances by the Department or the Crown in relation to the subject-matter of
this RFP except as set out in this document.

9.2 Cancellation of Procurement

Although the Department expects and intends that the Crown will enter into a Processing
Agreement or Purchase Agreement, as the case may be, with the successful Proponent, the
Department is not bound to accept any Proposal. Further, the Department may at any stage prior
to the signing of a Processing Agreement or Purchase Agreement cancel the Procurement or
proceed in a different manner to procure the processing or purchase of the Crown royalty
volumes of bitumen addressed by this RFP.

9.3 Non-recourse / Limitation of Claims

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Each Proponent, by submitting a Proposal, undertakes that neither it nor any member of any
consortium on whose behalf the Proposal is submitted, will make any claim of any kind
whatsoever against the Department or the Crown, either for reimbursement of any costs or for
damages arising from any alleged cause of action arising from or in relation to this RFP process
(other than an executed Processing Agreement or Purchase Agreement), whether or not this RFP
process culminates in an executed Processing Agreement or Purchase Agreement with any
Proponent.

GLOSSARY OF TERMS

In this RFP, the following expressions have been defined as having the following meanings:

“Addenda” means amendments to this RFP, as contemplated by and issued in accordance with
Section 2.3;

“APC” means the Alberta Purchasing Connection, being HMQ’s electronic tendering system;

“APC Site” means the web page specifically assigned by APC for this RFP;

“BAFO” means the “best and final offer” process contemplated by Section 8.1 in the event that
the Minister selects two or three Proposals pursuant to Section 7.6;

“BPD” means barrels per day (based on calendar day and not stream day);

“Contractor” means the entity that enters into the Processing Agreement or the Purchase
Agreement, as the case may be, with the Crown;

“Crown” means, as contemplated by Section 8.2, either HMQ or, at the election of HMQ, an
agent of HMQ who enters into the Processing Agreement or the Purchase Agreement, as the case
may be, with the Contractor;

“Department” means the Department of Energy of the Government of Alberta;

“Enhancements” means, as contemplated by Section 4.5, options offered to the Crown, in

addition to the basic contractual arrangement offered by a Proposal, that but for Section 4.5
would not be compliant with the RFP;

“Fairness Monitor” means the Fairness Monitor described in and contemplated by Section 3.10;

“Final RFP” means this RFP as issued in final form on October 19, 2009;

“HMQ” means Her Majesty the Queen in right of Alberta, being the Government of Alberta;

“Initial RFP” means the RFP as initially issued in preliminary form on July 21, 2009;

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“Processing Agreement” means, as contemplated by Section 1.1, the Processing Agreement
with the successful Proponent;

“Processing Facility” means the new or expanded facility that will upgrade the Specified
Volumes;

“Procurement” means, as contemplated by Section 1.1, the process contemplated by this RFP;

“Proponent” means an entity or consortium, as the case may, that submits a Proposal in
response to this RFP;

“Proposal” means a proposal submitted in response to this RFP;

“Purchase Agreement” means, as contemplated by Section 1.1, the Purchase Agreement with
the successful Proponent;

“RFP” means this Request For Proposals;

“Specified Volumes” means the Crown’s royalty volumes of bitumen that are the subject of this
RFP, being a minimum of 50,000 BPD and a maximum of 75,000 BPD of neat bitumen (that is,
exclusive of diluent blended with bitumen); and

“Term” means the term of the Processing Agreement or Purchase Agreement, as the case may
be, as elected by the successful Proponent within the parameters specified by Section 2.1.

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 REQUEST FOR PROPOSALS
PROCESSING OF CROWN ROYALTY BITUMEN
APPENDIX

EVALUATION CRITERIA AND METRICS

PART 1 – GOVERNMENT GOALS AND OBJECTIVES

The Government of Alberta has assigned high priority to enhancing its economic returns from its
oil sands resources through a value-added strategy. This strategy involves processing bitumen to
higher value products such as synthetic crude oil, gasoline, jet fuel, diesel fuel and
petrochemicals. These objectives are aligned with the Government’s Provincial Energy
Strategy, and will be advanced by encouraging value-added processing of the Crown’s royalty
bitumen.

The successful Proponent in this RFP process will use the first tranche of the Crown’s royalty
bitumen made available through this RFP. In the future, as royalty bitumen volumes increase,
the Government anticipates that additional projects will be encouraged to develop in a similar
manner.

Experience in other countries has been that the development of eco-industrial clusters around
integrated operations has led to cost savings and new business opportunities while mitigating the
environmental footprint. Ideally, the successful project from this RFP will provide the
cornerstone for future synergistic developments in Alberta.

The Processing Facility must be capable of producing at least low-sulphur synthetic crude oil (30
degrees API or lighter). The Government will look favourably upon Proposals that upgrade
bitumen further; the production of higher value refined petroleum products and/or petrochemical
products is desirable.

The Government will favour a location in Alberta’s Industrial Heartland, northeast of the City of
Edmonton, but will consider another location in Alberta if a Proponent can demonstrate that
logistical and infrastructure challenges can be met and that such other location will equally
support the Government’s value-added objectives.

Proponents will be responsible to provide or arrange for their own site and all infrastructure
required for both construction and operation of the Processing Facility, including supply of
electrical power, natural gas and water.

The Government will favour innovative, “gold standard” approaches to the environmental
footprint of the Processing Facility.

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PART 2 – ECONOMIC ASSUMPTIONS

Proposals should incorporate throughout their Proposals the following economic assumptions so
that a common basis can be applied for evaluation purposes. Proponents may in addition provide
alternate cases.
• WTI, condensate and other oil and gas prices, exchange rates and inflation rates used for
financial analysis should be those published by GLJ Petroleum Consultants at
http://www.gljpc.com/ as of the date of the Final RFP.
• Light sweet synthetic crude oil should be priced at parity with WTI. A Proponent may
put forward its views on the price of its synthetic crude oil relative to higher or lower
qualities.
• Pricing of refined products and petrochemicals should be provided consistent with the
above stated crude oil price.
• Light/heavy differential based on WCS priced at 70% of WTI. Sensitivities of 75% and
65% should be included.
• Cold Lake Blend assumed to be priced equivalent to WCS.
• Natural gas price based on the GLJ Petroleum Consultant’s forecast of ARP.
Sensitivities at plus or minus 20% of the GLJ price forecast should be included.
• Electricity price based on 10 times the gas price (i.e. gas price of $5/MMBtu is equivalent
to electricity at $50/MW).
• Sensitivities for local inflation affecting construction costs should be considered
• Foreign exchange sensitivities of $1.00 and $0.80 ($US/$Cdn) should be considered.

PART 3 – EVALUATION CRITERIA

Proposals that meet the Contractual Parameters set out in section 2.1. of the body of the RFP will
be evaluated using the following evaluation criteria:

No. Criteria

1. Business Plan

2. Technology and Project Configuration

3. Proponent’s Capability

4. Project Financing

5. Commercial Arrangement; Risks and Returns

6. Project Execution

7. Bitumen Feedstock

8. Project Economic Viability

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 9. Product Diversification

10. Environmental Performance

11. Government Strategic Objectives

PART 4 – EVALUATION PROCESS

Each proposal will be evaluated by the Evaluation Team using the above eleven criteria .
• For each criterion, the Proponent must:
o address all items, providing supporting documentation for all assertions; and
o provide a self-evaluation, giving justification for ratings.
• The eleven criteria are not weighted in the assessment.
• The Evaluation Team’s collective assessments will be used to rank Proposals using a two-
dimensional analysis, in which two key overarching objectives are balanced: the “Strength
of the Proposal”; and the “Expected Benefits to Alberta”.
• The two-dimensional rankings will then be used to inform the selection process.
• Each criterion consists of four performance levels:
o A – criterion not met
o B – criterion partially met
o C – criterion met
o D – criterion exceeded

RFP Evaluation Criteria & Metrics

The Evaluation Matrix
The Proposal Connectors/Enablers Alberta Benefits
(What?) (How?) (Why?)
5. Commercial Arrangement,
1. Business Plan and Sharing of Risks and 8. Project Economic Viability
Returns
2. Technology 6. Project Execution 9. Product Diversification
10. Environmental
3. Proponent’s Capability 7. Bitumen Feedstock
Performance
11. Government Strategic
4. Project Financing
Objectives

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 Illustrative Evaluation Grid
PART 5 – SECTION-BY-SECTION CONTENT AND EVALUATION

1. Business Plan
Preamble
In this section of the Proposal:
• Provide an overall description of the proposed project, including the degree of upgrading
intended, the products intended to be produced, and the Proponent’s intended strategy for
transporting and marketing those products.
• Indicate whether the Proponent is proposing a Purchase Agreement or a Processing
Agreement or is proposing in the alternative.
• If a Processing Agreement is proposed, indicate whether the Proponent is including (i) an
offer to select which products will be produced from the Specified Volumes and/or (ii) an
offer to market the products produced from the Specified Volumes.
• Describe how the proposed Processing Facility fits the overall energy markets and how it is
aligned with expanding markets for Alberta’s bitumen resources.
• Outline the Proponent’s objectives and vision for the Processing Facility, including future
capabilities.
• Outline the business plan for the project, including the initial stage as well as any intended
staging or expansions.
• Describe the location of the project, and if the location is other than Alberta’s Industrial
Heartland, detail the Proponent’s plan for meeting the logistical challenges of the location as
well as the benefits of the location relative to the Government’s value-added objectives.
• Describe the infrastructure requirements for the project, including pipelines, storage and
terminalling facilitates, connections to rail lines, access roadways, connections to utilities,
water supply facilities and pipelines, waste water disposal pipelines, and supply of electrical
power, natural gas and water; set out the Proponent’s plan for meeting each of these
infrastructure requirements.
• Indicate generally the Proponent’s business plan relative to each of engineering design,
construction, financing and operation.
• Indicate all intended non-arm’s length relationships relative to the project.
• Set out the Proponent’s intended timeline and key milestones for the project (including any
proposal to construct the Processing Facility in phases); the timeline must state (i) the date
the Proponent anticipates that full project sanction will occur, and (ii) the date the Proponent
anticipates that the Processing Facility will be fully operational and in a position to accept the
Specified Volumes for processing.
• If the Processing Facility is proposed to be constructed in phases, fully outline the assurances
the Proponent proposes in order to assure the Crown that the Processing Facility will proceed
beyond the initial phase to a capacity of at least 100,000 BPD by December 31, 2018.
• Describe the current status of the project, including all steps taken to date and how far the
project has advanced, including at least the current stage of (i) engineering design, (ii)
regulatory approvals, and (iii) financing approvals.

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 Language Ladder Statements

A The Proposal is deficient in many of the business plan expectations described in the above
Preamble; or, if the Processing Facility is to be constructed in phases, there is no assurance
that phases beyond the initial phase will proceed as intended.
B The Proposal meets most of the business plan expectations described in the Preamble but
either misses some of the expectations or the justifications are unclear or not fully convincing;
or, if the processing facility is to be constructed in phases, there is limited assurance that
phases beyond the initial phase will proceed as intended.
C The business plan described in the Proposal is comprehensive and includes the project’s
alignment with expanding energy markets with a clear marketing strategy and plan. The
Processing Facility will be located in Alberta’s Industrial Heartland, or alternatively at a
location that presents, as convincingly demonstrated by the Proposal, logistical and value-
added advantages equal to or better than Alberta’s Industrial Heartland. If the Processing
Facility is to be constructed in phases, there is a high degree of assurance that phases beyond
the initial phase will proceed as intended. The history and current status of the project and the
remaining steps required to full project sanction are set out clearly …
D … AND an innovative vision of how this project fits into the expectations for a growing
market for Alberta upgraded energy products is provided.

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2. Technology and Project Configuration
Preamble
In this section of the Proposal:
• Describe the intended processes and technology that the Proponent has selected for the
Processing Facility, and the reasons for selection.
• Describe the intended project configuration, scale, process selection, integration and site
plan.
• Describe the confirmed or potential integration opportunities within an eco-industrial cluster.
• Indicate all technological factors relevant to the products that the Processing Facility will be
capable of producing.
• Demonstrate that the project will be “world scale”, or alternatively, indicate what factors
were taken into account to propose that the project be smaller than “world scale”.
• Describe utilities and off-sites.
• Describe the basis for and level of confidence in the capital cost estimate, and provide a
detailed itemized breakdown of the costs included in the estimate and an explanation of any
allowance for contingency. Show erected cost (including direct construction costs as well as
indirect construction costs such as engineering, home office and project management) for
each processing unit inside battery limits, erected cost for off-sites and utilities, and owner’s
costs (including project development costs, management team costs, spare parts, and
recruitment and training of plant operating personnel). Break out any anticipated escalation
of costs during the construction period.
• Describe all technological solutions intended in relation to infrastructure requirements.
• Provide a simplified material and energy balance, showing feedstock quality, product yields,
emissions, GHG production/recovery, other feedstocks, and consumption of natural gas,
power and water.
• Indicate the design standards used or intended to be used for plant reliability, safety and
environmental performance.
• Describe how the Processing Facility will be technologically compatible with the
Proponent’s ultimate vision of the project, including in relation to each stage or expansion
phase intended by the Proponent.

Language Ladder Statements

A The Proposal is deficient in many of the technology requirements described in the above
Preamble.
B The Proposal meets most of the expectations described in the Preamble, but either misses
some of the key technology expectations or the justifications are unclear or not fully
convincing.
C The Proposal meets the expectations described in the Preamble, provides clear and convincing
justification for the process, technology, capital cost estimate, scale, and design standards to
be used, and includes a detailed calculation of the material balance for all feedstocks, products
and consumables. It demonstrates that all of the infrastructure required to support the project is
achievable …

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D … AND presents a vision of the ultimate potential of the technology that will be used in the
project and demonstrates that the initial phase of the project is technologically compatible with
the proposed ultimate vision of the fully developed project, provides opportunities for
integration with other facilities in an eco-industrial cluster, and has carbon capture capability.

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3. Proponent’s Capability
Preamble
In this section of the Proposal:
• If the Proponent is a consortium or joint venture or partnership, outline the intended legal
structure of the arrangement, indicate which corporate entities will comprise the
“Proponent”, and outline the respective roles all such entities will contribute as part of the
consortium;
• Indicate which corporate entity the Proponent intends will enter into the Processing
Agreement or Purchase Agreement, as the case may be, with the Crown; if the proposed
contracting entity will be a “special purpose vehicle” without substantive assets other than
the Processing Facility, indicate what backstopping, if any, will be provided by consortium
members or any parent corporation;
• Detail the relevant experience and expertise of the respective entities comprising the
Proponent in relation to (i) construction projects of magnitude similar to the proposed
Processing Facility, (ii) constructing, operating and/or maintaining similar facilities (iii)
securing financing for projects of similar magnitude, and (iv) producing, selecting and/or
marketing of upgraded, refined or petrochemical products.
• Set out the individuals who will comprise the Proponent’s management team during the RFP
process and until (at least) execution of a Processing Agreement or Purchase Agreement, the
relevant experience, expertise and qualifications of each such individual, and the respective
roles they will be expected to carry out. Confirm compliance with Section 5.4 of the RFP
with respect to personal information of such individuals.
• Indicate all key consultants retained or expected to be retained by the Proponent in relation to
the project (including but not limited to engineering design and financing), including an
indication of the key individuals who are expected to provide the services and an overview of
their respective relevant experience.
• Indicate all strategic partners that the Proponent has or expects to engage in furtherance of
the project, the role of all such strategic partners, and their respective relevant experience.
• Provide an overview of all current ongoing business activities of entities comprising the
Proponent that may be relevant to the capability of the Proponent to successfully carry out its
proposed project.
• Note any business management, project management or risk management systems deployed
by the Proponent on a corporate basis that may be relevant to the capability of the Proponent
to successfully carry out its proposed project.

Language Ladder Statements

A The Proposal is deficient in many of the capability expectations described in the above
Preamble.
B The Proposal meets most of the capability expectations described in the Preamble, but either
misses some of the key expectations or the justifications are unclear or not fully convincing.

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C The Proposal presents convincing evidence of the strong capability and experience of the
Proponent and its team in all aspects of projects of this size, including strategic partners where
needed …
D … AND includes demonstrated credibility and reliability in relation to projects of similar
magnitude, through strong project management and risk management and contingency
planning.

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4. Project Financing
Preamble
In this section of the Proposal:
• Set out in detail the Proponent’s plan for financing the construction of the Processing
Facility, including the intended equity/debt split, and all intended sources of equity and/or
debt.
• State all material risk factors pertinent to the financing and the financeability of the project,
together will all risk mitigation strategies initiated or intended by the Proponent in relation to
those risk factors, and any fallback or contingency plans for financing the project.
Specifically identify any risk factors that currently constitute preconditions to financing.
• Include copies of any commitment letters or letters of intent from potential sources of equity
or debt.
• Include copies of any letters of support from third party advisors regarding the likelihood of
being able to raise equity and/or debt financing for the project.
• Indicate any parental guarantees or other credit assurances intended to be supplied by related
parties.
• If the Proponent proposes that the Processing Agreement or Purchase Agreement (as the case
may be) will be entered into other than by a “special purpose vehicle”, indicate whether the
Proponent intends “non-recourse” project financing as opposed to financing based on the full
balance sheet of one or more corporate entities comprising the Proponent.
• Indicate the amount and source of all presently committed funding for the project as well as
all presently available cash committed to the project.
• Indicate the Proponent’s estimate (which should be a range, based on low, medium and high
project costs) of the amount of financing that it will need to secure in order to complete the
project, and indicate the Proponent’s expectation of what maximum amount of project costs
(as estimated at time of full project sanction) will be financeable.
• Set out the Proponent’s internal process that it proposes to employ to assess the financeability
and viability of the project, when considering whether to proceed with full project sanction.

Language Ladder Statements

A The Proponent’s plan for financing the Project is deficient in many of the aspects described in
the above Preamble.
B The Proponent’s financing plan meets most of the expectations described in the Preamble, but
some of the key expectations are missing or the justifications are unclear or not fully
convincing.
C The Proposal clearly presents a credible financing plan in all respects, including source of
funds and amount required and process for achieving full project sanction …
D … AND includes a solid contingency plan to address any unexpected events or uncertainties
that may arise in relation to the financing of the project, and significant financial commitments
are in place.

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5. Commercial Arrangement; Risks and Returns
Preamble
In this section of the Proposal:
• Describe the commercial arrangement that the Proponent is proposing, in sufficient detail for
the Department to be able to assess the return the Crown can expect to receive from the
Specified Volumes, and indicate any ancillary benefits to the Crown that the Proponent
anticipates will arise under the commercial arrangement.
• If the Proponent proposes a Purchase Agreement, set out in full detail the formula that the
Proponent proposes for determining the market price to be paid to the Crown throughout the
Term in return for the Specified Volumes.
• If the Proponent proposes a Purchase Agreement, set out the products that the Proponent will
produce in Alberta from the Specified Volumes.
• If the Proponent proposes a Processing Agreement, set out in full detail the formula that the
Proponent proposes for determining the processing fee to be paid by the Crown throughout
the Term for processing the Specified Volumes, having regard to the range of products
potentially produced under the Processing Agreement.
• If the Proponent proposes a Processing Agreement, indicate whether the Proponent wishes to
separately offer (i) product selection services and/or (ii) marketing services, in each case with
a formula for determining the fee that the Proponent will (separately from the processing fee)
charge to the Crown for such services. Clearly indicate the extent, if any, to which the
returns to the Crown from the Specified Volumes will be aligned with the returns to the
Proponent from bitumen feedstock other than the Specified Volumes, and provide details of
the arrangement contemplated, including the proposed methodology for pro rata or other
sharing of returns, the proposed methodology for allocating costs, input price assumptions
and usage factors, and the proposed role of the Crown in approving product changes.
Indicate any proposed sharing of returns in the event that operating capacity exceeds design
capacity or in the event of improved yields.
• If the Proponent proposes a Processing Agreement, set out the Proponent’s expectation of the
returns to the Crown from the sale by or on behalf of the Crown of products produced from
the Specified Volumes.
• Set out all other key details of the commercial arrangement proposed by the Proponent,
within the parameters established by Section 2.1 (“Contractual Parameters”) of the body of
this RFP.
• Set out all allocations of risks and rewards proposed by the Proponent, within the parameters
established by Section 2.2 (“Risk Allocations”) of the body of this RFP.

Language Ladder Statements

A The Proposal is deficient in relation to many of the requirements of the above Preamble.
B The Proposal meets most of the requirements of the Preamble, but some of the key
expectations of the commercial arrangement are missing or explanations are unclear or not
fully convincing. The Proposal is unlikely to provide a level of return to the Crown that is
commensurate with the risk the Crown would assume under the Proposal.
C The Project Plan clearly meets the requirements of the Preamble, provides a reasonable

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 methodology for arriving at purchase price or processing fee (as the case may be), fully
complies with Sections 2.1 and 2.2 of the body of the RFP, and proposes an allocation of risks
that is reasonable having regard to the proposed allocation of returns and rewards …
D … AND fully insulates the Crown from all risks of capital cost overruns, unexpectedly high
operating costs or technology difficulties.

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6. Project Execution
Preamble
In this section of the Proposal:
• Address the carrying out of the project following signing of a Processing Agreement or
Purchase Agreement, as the case may be.
• Describe the respective roles to be carried out by members of the Proponent and its
consultants and strategic partners, and outline their respective experience and qualifications
in relation to such roles.
• List the individuals who will constitute the project management team, their respective roles,
and their respective experience and qualifications.
• Describe the project management plan, including all key steps, from conceptual planning,
engineering, regulatory approvals and construction through start-up.
• Indicate the project’s stage-gate and internal approval process throughout.
• Explain, with justifications for all key decisions, the proposed construction plan, including in
relation to scale of facilities, logistical considerations and constraints, availability of labour,
modular construction, and any other relevant factors.
• Set out key project execution milestones, in each case with the date the Proponent anticipates
achieving the milestone; fully detail the timing of any intended phasing of the construction of
the Processing Facility.
• Describe the Proponent’s plan for meeting health and safety regulations, and identify (i) any
plans or processes designed to achieve outstanding health and safety performance, and (ii)
any project-specific risks and challenges and the management systems that will address those
risks and challenges.
• Detail intended oversight processes, including steering committee composition and whether
it is proposed that the Crown be invited to attend and participate (on a non-voting basis) at all
steering committee meetings.
• Identify major construction and other risks during the project execution phase, including
intended risk management and risk mitigation strategies.

Language Ladder Statements

A The Proposal is deficient in many of the expectations described in the above Preamble.
B The Proposal meets most of the expectations described in the Preamble, but either misses
some of the expectations or the justifications are unclear or not fully convincing.
C The Proposal is detailed and describes all key factors (stage-gates, milestones, oversight,
logistical requirements) from conception through engineering, regulatory approvals,
construction and start-up. The roles, experience and track-records of key team members,
consultants and strategic partners are appropriate for the task …
D … AND indicates a high probability of superior project execution, supported by sound risk
management and risk mitigation strategies.

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7. Bitumen Feedstock
Preamble
In this section of the Proposal:
• Fully describe the Proponent’s plans to obtain (i) bitumen feedstock in addition to the
Specified Volumes and (ii) diluent.
• Demonstrate that bitumen feedstock comprising not less than 25% of the facility’s
throughput volumes has been secured and will be available to the facility, and indicate any
contingency plans that further support security of feedstock supply.
• Set out the Proponent’s expectations of the volumes of non-Crown bitumen feedstock that
will be received throughout the Term, and the Proponent’s intended commercial arrangement
with respect to those volumes.
• If the Proponent anticipates that a portion of its feedstock will be synbit (being bitumen
blended with synthetic crude oil), provide an outline of the intended products to be produced
therefrom and the expected pricing, revenue and incremental capital and operating costs.
• If the Proponent proposes a tailored stream of Specified Volumes, fully set out the detailed
benefits to the Crown the Proponent anticipates will flow from narrowing the scope of the
bitumen the Crown may deliver as Specified Volumes, and address anticipated blend ratios,
nature of diluent, and cost, operation or infrastructure implications for the Crown.
• Describe the Proponent’s plan for managing diluent, including its plan for returning to the
Crown diluent supplied with the Specified Volumes.
• Describe the Proponent’s plan for managing non-Crown bitumen feedstock in conjunction
with managing the Specified Volumes. Address managing feedstock quality differences,
including diluent quality, both within the Specified Volumes and between the Specified
Volumes and non-Crown bitumen feedstock
• Describe the Proponent’s intended facilities and infrastructure for transporting, receiving,
handling and storing feedstock. Indicate any proposed or potential cooperation or facilitation
in regard to transportation to the Processing Facility of the Specified Volumes.

Language Ladder Statements

A The Proponent has committed to provide 25% of the bitumen throughput of the plant, but
information on the quality of that feedstock or its source is missing or unclear.
B The Proponent has committed to provide 25% of the bitumen throughput of the plant and the
quality and source of that feedstock is clearly defined as well as the associated feedstock and
diluent management system.
C The Proponent has committed to provide at least 50% of the bitumen throughput of the plant
and the quality and source of that feedstock are clearly defined as well as the associated
feedstock and diluent management system …
D … AND has provided evidence of a commitment and ability to increase this share to over 50%
once the facility has met all of its design objectives.

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8. Project Economic Viability
Preamble
In this section of the Proposal:
• Demonstrate the economic viability of the project, having regard to “Part 2 - Economic
Assumptions” of these Evaluation Criteria and Metrics.
• Provide an overview of the model used by the Proponent to assess the economic viability of
the project, and confirm that the Department may have access to that model upon request.
• Include a year-by-year cash flow analysis for the project, providing project IRR and project
NPV (based on a 10% real discount rate, supplemented by a calculation based on the
Proponent’s expected discount rate, accompanied by an explanation of the basis for that
expectation) both before and after income tax, and including reference to debt service
coverage.
• Include an assessment of the expected competitiveness of the Processing Facility relative to
other existing or planned Alberta processing facilities, including both capital and cash costs
per barrel of bitumen feed.
• Provide sufficient detail to enable the Department to project, based on the Proponent’s
assumptions, the returns and rewards to the Crown that could be expected to flow from the
commercial arrangement proposed by the Proponent.
• Indicate all prospective sources of funding (other than the processing fee under the
Processing Agreement) for the project from any level of government, including committed as
well as potential funding, and demonstrate the impact of such funding on project economics.
Indicate the current status of all such funding requests and the Proponent’s expectations
regarding probability and amount of funding.
• Where the Proposal offers product selection and/or marketing services, indicate the effect on
project economics of such services.

Language Ladder Statements

A The Proposal does not meet the requirements of the above Preamble, or the project economics
do not indicate a viable project, or the information provided is inadequate to make an
assessment of the likely viability of the project.
B The Proposal meets the requirements of the Preamble and indicates a viable project, but the
supporting information is not complete or clear.
C The Proposal indicates strong project economics, as supported by cash flow analysis and
calculation of the net present value of the project …
D … INCLUDING a positive benchmark comparison with other similar processing facilities
with respect to capital and operating costs per barrel.

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9. Product Diversification
Preamble
In this section of the Proposal:
• Describe in detail the type and quality and respective quantities of products intended to be
produced at the Processing Facility.
• The products must include, at minimum, low sulphur synthetic crude oil with an API gravity
greater than 30; the Department will look with favour upon projects that will produce refined
products and petrochemicals instead of or in addition to synthetic crude oil.
• Describe plans to market the products from the Processing Facility, including any plans to
develop and support alternate markets for these products.
• Provide support that targeted markets will adequately absorb the products.
• Indicate the expected primary outlet for the products from the Processing Facility, and the
Proponent’s expectation as to how the products will fare in that market.

Language Ladder Statements

A The value of the products from the Processing Facility will be equal to a high quality synthetic
crude oil …
B … AND both existing and new market channels for those products are described and are likely
to be accessible.
C A significant fraction of the product slate from the Processing Facility will have a value above
that of synthetic crude oil …
D … AND both existing and new market channels for the products are described and are likely
to be accessible.

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10. Environmental Performance
Preamble
In this section of the Proposal:
• Discuss all aspects of the expected environmental performance of the project.
• Outline the intended approach for meeting all governmental requirements, and any plans for
exceeding governmental requirements; the Department will favour Proposals that intend
outstanding (“gold standard”) environmental performance.
• Indicate any contingency plans addressed at future evolution of environmental standards;
address in that regard cumulative effects, water and air as well as greenhouse gas (“GHG”)
emissions.
• Demonstrate the use of “best available technical and economically achievable” standards,
and outline any initiatives that will make the project an environmental leader.
• Provide a comparison against the environmental performance of other current and planned
Alberta upgrading facilities. Describe how the facility will be designed so as to be at least in
the top quartile of energy efficiency, based on industry benchmarking of existing facilities.
• Describe plans for mitigation of GHG emissions. If carbon capture and storage is intended or
contemplated, separately break out the Proponent’s best estimate of the incremental cost of
carbon capture and storage.
• Detail the project’s plan for water use, the source of such water, the extent of re-use and the
amount of water returned.
• Identify by type the amount of expected air emissions.

Language Ladder Statements

A The Proposal is deficient in the environmental performance requirements described in the

above Preamble.
B The information provided demonstrates that the project is likely to meet or surpass all
regulatory requirements with respect to environmental performance.
C Benchmark information provided on environmental facilities and costs demonstrate that the
project will be a leader in environmental performance by using best available technical and
economically achievable practices with respect to air, land and water (including GHG
emissions) …
D … AND a commitment and plan has been put in place to address and mitigate significant
environmental issues, and the project will have outstanding environmental performance,
including carbon capture or equivalent mitigation of GHG emissions.

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11. Government Strategic Objectives
Preamble
In this section of the Proposal:
• Describe how the project will assist the Government of Alberta in achieving the objectives
set out in “Part 1 – Government Goals and Objectives” of these Evaluation Criteria and
Metrics.
• Describe all ancillary benefits to the Government likely to arise from the project. Indicate
how the project will foster the next steps in the development of Alberta’s hydrocarbon value-
added industries. Highlight the potential economic benefits to the Province of Alberta.
• Note any new technologies proposed to be implemented within the project that may be
beneficial to others or otherwise add to Alberta’s global competitiveness.
• Describe any initiatives to involve local communities, including First Nations or Métis
communities, in construction or operation of the project.

Language Ladder Statements

A The project will upgrade the Specified Volumes of the Crown’s royalty bitumen to at least
high quality synthetic crude oil.
B The project will represent important progress in advancing Alberta’s Provincial Energy
Strategy by increasing the fraction of raw bitumen that is upgraded within Alberta beyond
synthetic crude oil …
C … AND a significant fraction of the upgraded product will be suitable as a feedstock for the
petrochemical industry in Alberta …
D … AND will provide a foundation for attracting a highly competitive cluster of hydrocarbon
value-added industries.

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